A UK All-Party Parliament Group (APPG) has published a report on crypto or digital assets. In brief, the report states that crypto is here to stay and requires comprehensive regulation. The report is entitled ‘Realising Government’s Vision for the UK To Become a Global Hub for Cryptocurrency & Fintech Innovation.’
The UK launched its inquiry in August of 2022 following the UK Government’s decision to make the UK the global hub for cryptocurrency investment.
The report incorporated the perspectives of various industry insiders, including operators, regulators, industry experts, and the general public. The group also held a series of public evidence sessions in Parliament.
Chaired by Dr. Lisa Cameron MP, the cross-party group includes MPs and Lords from various parties across the UK. The report notes that regulation is needed to protect consumers as there are considerable risks. At the same time, the APPG says the UK has a “finite window” of less than two years to ensure leadership in crypto regulation as other jurisdictions have moved to craft digital asset regulations.
Cameron states in the report:
“Following the Government’s announcement of its vision for the UK to become a global hub for cryptocurrency, the APPG launched our Inquiry to help identify the issues that policymakers will need to consider moving forward … Given the rapid growth of cryptocurrency and digital assets, the timing of this report is vital to protect consumers whilst ensuring the UK’s leadership in this sector can be realised.”
She said she is delighted to present the group’s inaugural report regarding the potential opportunities and challenges of the UK’s vision of being a global digital asset hub.
The APPG report claims:
“Cryptocurrency and digital assets have the potential to significantly transform our established financial services system and the way we deal with money. The rapid growth of cryptocurrency and digital assets in recent years and the increased interest and adoption amongst consumers and investors, suggests that the sector is here to stay and that it therefore needs to be regulated to protect consumers and to ensure guardrails for investment and economic growth.”
As the objective is to lead the world on digital assets, the APPR makes 53 specific recommendations for a regulatory approach to crypto, noting that industry participants want clear regulation.
Other areas of digital asset policy include a digital pound, or central bank digital currency, and the need for high stands to mitigate or protect against nefarious actors which may aim to take advantage of crypto markets.
In discussing a digital pound, the APPG voices privacy concerns stating:
“Any decision to introduce a digital pound in the future will be a profound decision and will require significant trust amongst the public and consumers. Government must ensure that there is sufficient and appropriate education and awareness amongst the wider public which will be a determining factor in the success of any future digital pound.”
Access to cash must be protected, while a CBDC should not staunch private-sector innovation.
The report advocates for a “crypto tsar” to help champion the UK’s leadership in crypto while concerns exist about the shortcomings of regulators to “deliver on their responsibilities.”
“All UK regulators related to the sector should have dedicated and properly resourced cryptocurrency and digital assets units.”
Ian Taylor, Board Advisor at CryptoUK, commented on the APPG report:
“We are extremely pleased to see that the inaugural report from the Crypto & Digital Assets APPG issued today. This is balanced, considered and presents a holistic view of the UK’s crypto and digital assets sector. We have continued to strongly advocate for the need to be working alongside the government in ensuring that the industry has the opportunity to grow within a regulatory framework that allows the development of new technology and does not restrict or stifle innovation. We believe the recommendations from this report will allow for more engagement and cross-governmental dialogue to continue to educate and inform policymakers on the critical issues our members face.”
Taylor described the report as “unique” as it incorporates a cross-party perspective involving the input of many different stakeholders. He welcomed the “evidenced-based conclusions and recommendations.”
“The report recognises the significant growth of the sector in the UK and the tremendous opportunity it presents for the country’s economy and reputation as a leader in financial innovation. It also emphasises the need for the government and regulators to define a clear, proportionate and bespoke regulatory framework to enable blockchain businesses to operate effectively, foster innovation and protect consumers,” said Taylor. “We acknowledge the concerns about the readiness of the current regulatory governance regime, and fully support the work needed to ensure this is robust, fit-for-purpose and enables the industry to realise its full potential whilst operating effectively and safely.”
Taylor said the industry looks forward to working with the members of the APPG and other officials to support the outlined approach.
Recently, the European Union has approved MiCA legislation that provides for crypto regulation. Several Asian countries are pursuing the same and just last week, draft legislation was introduced in the US to provide a comprehensive digital asset ecosystem.
